Analysis shows 63% of equity release customers in the first 9 months of the year used some of the cash for home and garden improvements against 43% last year. Some 31% used some of the cash to fund holidays compared with just 19% in the third quarter of 2009.

Equity release broker Key Retirement Solutions (KRS) ‘Market Monitor’ showed £613.325m of equity was released from homes in the UK.

KRS said retired people spend more time at home, making home improvements more of a priority. Homeowners are also staying longer in their homes and so more willing to invest in them, said the broker.

KRS said confidence is returning to the market, with the return of lenders such as More 2 Life, which has launched innovative schemes for people with medical or lifestyle conditions.

Total sales of plans climbed 7.2% to 17,121 in the nine months from 15,969 in the same period of 2009 with drawdown plans – which enable customers to take cash when it is needed rather than as a single lump sum – making up 74.5% of sales compared with 63% last year.

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The average amount released for drawdown for nine months was £39,953 compared with £41,728 in the same period of 2009.

Around 35% of customers used some of the money to pay off credit cards or loans in the three months to September 30th – so practically unchanged from 36% in 2009.

Dean Mirfin, group director at Key Retirement Solutions, said: “Total sales of plans and total amount of equity released are both demonstrating strong growth with customers increasingly using the money to improve their homes or gardens.

“It’s a measure of confidence that customers are using the money for leisure and lifestyle improvements although clearing debts remains a major part of the market.

“Innovation by providers involving the launch of products offering enhanced terms for customers with medical or lifestyle conditions plus increasing use of drawdown all adds to more competition among providers which points to further growth into 2011.”